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Is Working Capital Management Value-Enhancing? Evidence from Firm Performance and Investments

Petmezas, D, Aktas, N and Croci, C (2015) Is Working Capital Management Value-Enhancing? Evidence from Firm Performance and Investments Jourmal of Corporate Finance, 30. pp. 98-113.

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Abstract

We examine the value effect of working capital management (WCM) for a large sample of US firms between 1982–2011. Our results indicate (i) the existence of an optimal level of working capital policy; and (ii) firms that converge to that optimal level (either by increasing or decreasing their investment in working capital) improve their stock and operating performance. We also document that corporate investment is the channel through which efficient WCM translates into superior firm performance. In particular, efficient WCM allows firms to redeploy underutilized corporate resources to higher-valued use, such as the funding of cash acquisitions.

Item Type: Article
Authors :
NameEmailORCID
Petmezas, Dd.petmezas@surrey.ac.ukUNSPECIFIED
Aktas, NUNSPECIFIEDUNSPECIFIED
Croci, CUNSPECIFIEDUNSPECIFIED
Date : 2 February 2015
Identification Number : https://doi.org/10.1016/j.jcorpfin.2014.12.008
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:36
Last Modified : 17 May 2017 14:37
URI: http://epubs.surrey.ac.uk/id/eprint/820735

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